28 Aug 2013
Climate Change Mitigation from the Bottom Up: Using Preferential Trade Agreements to Promote Climate Change Mitigation
by Rafael Leal-Arcas, World Trade Institute
Both the trade and climate change regimes have their own goals and tools. The main goals of the international trading system are trade liberalization, citizens’ welfare, economic growth, and the optimal use of the world’s natural resources. There is a set of closed and defined trade policy tools (i.e., trade regulation): tariffs, quantitative restrictions, trade remedies, subsidies, norms and standards, process and production methods, intellectual property rights, government procurement, services regulation et cetera, to name but a few. The main goals of climate change policy, on the other hand, are about environmental protection, sustainable development, and the preservation of eco-systems. To achieve these goals, climate change law uses the following policy tools across international law: trade policy tools, funding programs, taxes, permissions, prohibitions, international standards, and financial instruments.
This paper advocates the importance of involving major greenhouse gas (GHG) emitters through large preferential trade agreements (PTAs), such as the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership, with strong climate change chapters and through economic partnership agreements as avenues to mitigate GHG emissions. PTAs have become a necessity because of the stagnation of the multilateral trading system. The question is how to persuade countries to be parties to climate-based PTAs, and economic incentives for parties are a possibility. Regional trade arrangements could be designed to provide for an attractive package to settle trade-offs and conflicts of interest as well as facilitate the ultimate goal of creating a global climate regime. In proposing climate solutions through trade agreements, the paper also tries to stimulate non-Annex I countries to GHG emissions reduction.
Trade mechanisms can be an effective tool for securing environmental objectives. A regional approach seems more realistic than aiming for a global climate agreement. Both approaches (regional and global) share the objective of creating a strong international framework for climate action. However, they differ on how to achieve the goal.